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Approaches to Business as Mission Funding

Excerpt from the recently published BAM Global Think Tank report on Business as Mission Funding.

The word ‘funding’ refers to the spectrum of financial resources required for a business venture through the normal life-cycle phases of every business: start-up, growth, maturity, and decline. It includes a range of monetary sources, each with attributes unique to each stage of growth. Funding takes on many shapes and sizes, from self-funding to crowdfunding, microcredit to bank loans, and seed funding to venture capital.

Broadly speaking, the subject of funding includes sources, structure, application and management of monies in all areas of the business. In the context of business as mission, perceptions and actions relative to both the business and the capital should be informed by Biblical principles.

In a broader context, funding is distinguished as being financial capital – such as debt or equity – alongside other forms of capital input, such as intellectual, human, social, spiritual, infra-structural and natural.

BAM funding models

Traditional sources of business as mission funding parallel those in typical business funding. In the majority of cases, profitability is the key issue that drives capital to those companies most likely to achieve viability. For most investors, profitability is a non-negotiable measure of success. Read more

How to Prepare for Investors

What would you say were the most important things to prepare or think about as I approach a BAM investor? What are some typical pitfalls or mistakes I could avoid?

Funding for your new business is obviously crucial – no cash, no business. So let’s think about this from an investor’s perspective. What is it that interests him or her? What does he or she want to see? What questions answered?

Here’s what I’d be asking:

  • What exactly is the product or service that you intend to sell? Don’t assume that I understand it. Make it simple for me.
  • What is the market demand for this? Is it a cool idea, a “me too,” or is there a real demand? In other words, do people really need/want your product or service?
  • Who will your competitors be? How is your idea better than and different from theirs?

This first set of questions is about your viability in the market place. Is this a real business? This second set of questions is about you. Can I count on you? Read more

Ask a BAM Mentor: Financing a BAM Company

Twice a month, our panel of mentors answer your practical business questions. Send us your questions!

Dear BAM Mentor,

What would you say were the most important things to prepare or think about as I approach a BAM investor? What are some typical pitfalls or mistakes I could avoid?

Getting Prepared

Dear Getting Prepared,

Funding for your new business is obviously crucial – no cash, no business. So let’s think about this from an investor’s perspective. What is it that interests him or her? What does he or she want to see? What questions answered?

Here’s what I’d be asking: What exactly is the product or service that you intend to sell? Don’t assume that I understand it. Make it simple for me. What is the market demand for this? Do people really need/want your product or service? Who will your competitors be? How is your idea better than and different from theirs?

This first set of questions is about your viability in the market place. Is this a real business? The next set of questions is about you. Can I count on you? What is your background? Why are you particularly qualified to launch a business like this one? Do you have a specific knowledge base or experience that would give me confidence that you can actually pull this off? Who do you have around you? What is your track record? Who will vouch for your character? Your commitment to Christ?

Read more

Corruption Cheat Sheet

BAM Cheat Sheet Corruption

Click image to open PDF, save or print.

 With thanks to Larry Sharp and Dwight Nordstrom.

25 Years of Business in China: Interview on Tackling Corruption

Interview with Dwight Nordstrom

Dwight, you have been in business for 25 years in China, and not just any business, you’ve been involved in manufacturing in big industries, like chemicals and telecommunications, regularly importing supplies and exporting products. How big has the issue of corruption been?

Well let me just start by saying: This is real! This is not hypothetical stuff, it’s a big issue for us. I would say I have to deal with about 25 cases a year of substantial corruption-related situations. To put that in perspective with other common issues faced by businesses, in last 20 years, across our operations of about 5000 people in Asia, I have had zero illegal drug issues, a couple of alcohol related issues, I have had two sexual harassment issues of a serious nature to deal with, but the major issue by a long way is corruption which I have had to deal with at least twice a month. Corruption is a big issue.

Can you give us an example where you’ve had to deal with someone trying to bribe you?

We’ve had situations where we’ve lost business over refusing to pay a bribe. We had a speciality chemical and the representative in a wholly-owned German company asked for a 5% kickback, with 1% going into a personal account. That was a million dollar plus account per year and I don’t even know now six years later if we’ve ever recovered the value of the account. Read more

Lessons from the Edge: Dealing with Bribery in China

Insights from a BAM Practitioner

Dwight Nordstrom is a veteran of doing business in Asia for almost 30 years. He is on a continuing journey of learning how to deal with bribery and corruption as he leads Pacific Resources International, to expand manufacturing operations in China.

Don’t make blanket statements about bribery and corruption. 
This issue is simple, yet complex! It is good practice to talk about individual cases versus making unilateral statements. Brainstorm with others. Ask, What does this mean in this context?  Is there a different way we could do this? Is there a way we could still win this business? 

Have a zero tolerance approach in your top leadership. 
Within your own company leaders – especially in your purchasing and financial operations – you have got to have a zero tolerance for bribes. Have good frameworks in place to train, implement and evaluate that zero tolerance approach.

Be incredibly selective about what industry and type of business you get into. 
There are a lot of businesses I wouldn’t touch because it is such a corrupt industry. Select the type of industry very carefully since that will determine how much corruption you will face. Build your competency in an industry that is less corrupt before taking on business in more corrupt sectors.

 

Ask a BAM Mentor: Dealing with Corruption

Twice a month, our panel of mentors answer your practical business questions. Send us your questions!

Dear BAM Mentor,

My customs broker tells me I have to give a gift to the customs officials to get our materials out of customs. He said it’s standard, no big deal. I asked the pastor at our local church and he said it would be terrible to pay a bribe like that – it’s illegal and gives a very bad lesson to others.  I’m new in the business and to importing here, and our business may fold if I can’t get this out soon. Is this a time to die for my principles or should I go with “when in Rome, do as the Romans do”?

~ Contemplating Corruption

Dear Contemplating Corruption,

Over which principle are you considering ‘dying’?  Is it God’s call to honesty? Or is it obedience to the local church and, if so, is the church correct?  I suspect that untangling the issues will help.

It sounds like you live in one of the many countries where written law differs from applied law. That’s how speed laws work in the UK, incidentally – they are applied, but not strictly. Most western country laws against foreign bribery make an explicit exclusion for “expediting payment”, which morally can be classified as extortion by the official who is withholding your legal rights until he or she gets their bribe. That’s fundamentally different from bribing an official to get something for which you don’t have the right. Paying an extortionist is generally a bad idea, but it’s on a different moral level than bribery. I wouldn’t die over an extortionists demand. Read more

Lessons from the Edge: Inspired by Quality Coffee

Insights from a BAM Practitioner

‘Ben’ has spent a decade and more of his life in the specialty coffee industry. He has an unwavering passion for quality in coffee that has grown into a pursuit of quality in all aspects of his life – in business, in mission, and in relationships.

The quality of relationships in the company matter as much as the quality of the product.
In a sense, the quality of care for one another in the company is an equally desired product of the business. Let reconciliation have a major role in the company culture. Concepts we teach, like forgiveness, kindness and so on, become real and implanted in a persons character, in the context of relationships. This is where the real meaning of those company values comes alive.

Intentionally embody the mission in all aspects of the business.
I have realized that my mission is not to bring people into the church, but to help them to see Jesus. When Jesus’ values are synonymous with the company values, corporate life together becomes a training ground for life in the gospel. Business is a place where the values that Jesus embodies are taught and lived out through daily business life together.

Do business with excellence and ask God to show you all that he has intended for it. 
It is important to take business seriously and see it as something to be honored and stewarded as a gift from God, to be used for his purposes. It is important to invest my utmost into it and hope for the most from it. God designed business to create wealth and so I need to have a healthy view of money and wealth. To hope for success and growth is good!

10 Guiding Principles for Business as Mission

A good business as mission business will, by definition, have many of the characteristics of any well-run business. A kingdom business must be profitable and sustainable just as any other business. Integrity, fairness and excellent customer service are characteristics of any good business, not just a business as mission venture. As such, while important, those characteristics will not by themselves necessarily point people to Christ. A kingdom business begins with the foundation of any good business, but takes its stewardship responsibilities even further.

What follows is a list of principles that should underpin a business as mission business. First we list the basic foundational principles that must exist in any good business. Following that are the principles that distinguish a good business as mission business.

Foundational Business Principles

1.  Strives to be profitable and sustainable in the long term

Profit is an indication that resources are being used wisely. It indicates that the product or service being produced and sold does so at a price that covers the cost of the resources, including the cost of capital. For most businesses, profits are fleeting, and never a sure thing. It is common for businesses to experience periods of low profit, and even negative profit. Thus it is important to take a long-term view of profitability. Occasional windfalls are often what will sustain a company through periods of financial losses. For that reason a well-managed business will use extreme care when considering whether and when to distribute profits. Profit, and its retention, is not necessarily an indication of greed. Read more

Ask a BAM Mentor: Evaluating a Business Opportunity

Twice a month, our panel of mentors answer your practical business questions. Send us your questions!

 

Dear BAM Mentors,

What are the most important questions to ask myself when evaluating a business opportunity?

~ Business as Mission Newbie

 

 

Dear BAM Newbie

First and foremost, set your goals according to the principle, “Seek ye first His kingdom and His righteousness and all these things shall be added to you.” (Matthew 6:33). Then, ask God for guidance into a business ministry of His choice for you, wait for His answer with a listening heart and mind. Third, allow God to choose life and business partners who identify with your God-given vision and mission objectives by asking everyone who wants to be an investor or active partner in the business whether they understand, agree and fully embrace the vision God has given you. – Joseph Read more

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